Another Exit from Fios

CEO John Hesse, president and CEO of Oregon-based Fios, abruptly left the company Wednesday (Feb. 16) after a "personal disagreement" with its board of directors. The board of directors immediately added CEO to the title of its chair William Lyons.

Fios' senior director of marketing Donna Peterson is framing the departure with a positive spin:  "This is an orderly transition, continuing Fios’ positive momentum coming out of 2010, which was a banner year for processing volume and repeat customer business."

But no matter what pretty face Fios puts on the latest changes in the executive suite, the company has had a lot of upheaval in the last two years. Last October, counsel Mary Mack defected to ZyLab.

Hesse, who previously served as CFO and COO, replaced Chris Junker in May, 2010, who had joined Fios from Autonomy, in September 2009 and resigned "due to undisclosed personal reasons (but remained on the board).  (Junker had replaced CEO Gerald Massey "as part of a formal succession plan.) Other 2009 departures included consultants Prashant Dubey,  Sam Panarella, and Cynthia Bateman (now director of evidence and discovery management, forensic technology services at KPMG) when the short-lived consulting unit was shuttered — and sales/marketer Jeanette Sieplan, and PR chief Deborah Caldwell.

Lyons, right, previously served as chair and CEO of AXS-One, Inc. (an electronic archiving and retrieval company that was acquired by Unify in 2009), and according to his bio, "has a an extensive background in management, sales and marketing, operations, research and development, and mergers and acquisitions. He has successfully taken several companies public," which no doubt will fuel the long-brewing speculation that Fios (like so many e-discovery companies) may be looking to be purchased.

One industry veteran, who asked not to be identified, reads the latest executive suite move as "continued efforts to sell the company. Gerald Massey made no bones that was what he was doing but never got a deal done. I always thought Hesse was interim until they found someone else and looks like this is it," he said.  

Observes consultant George Socha, who has been tracking vendors for several years, "An interesting thing about Fios has been that since shortly after they opened their doors in 1999, every six months or so stories have circulated about their impending demise.  And still, here they are, alive and, they tell me, in a stronger financial position than ever."

No press release is yet available.

Update: We had a chance to question Lyons about the transition. Here's the Q&A conducted 2/22/11:

1. There’s been a lot of turnover in the top spot at Fios over the last few years. Why?

While there have been a number of transitions, the changes at the top spot have been orderly and measured, though of course, not pre-planned. Gerald Massey was Fios’ CEO for more than 6 years before he requested a change. The board instated John Hesse, then CFO, to the interim position until we named Chris Junker as CEO in September 2009. For personal reasons, Chris resigned so he could spend more time in Chicago. However, Junker has remained on our board, which has insured a smooth transition, with no loss of momentum. Similarly, when we promoted John Hesse from CFO and COO to CEO in April 2010, I was named chair. Therefore, when John Hesse left to pursue other interests, Fios had in me an experienced high-tech CEO (20 years as CEO) already completely up-to-speed on Fios’ strategy, supportive of its goals/plans and very familiar with the senior team.

2. What do you hope to accomplish in your tenure as CEO?

I hope to continue the momentum we are experiencing coming out of the economic downturn. We had a record year in 2010 for data processing volume and percentage of repeat customers. And 2011 is off to a very strong start. In addition, Fios has a well-known brand in e-discovery earned through our successful engagements with major companies and law firms since 1999. It is my goal to aggressively drive our strategy, which leverages Fios’ know-how with technology to facilitate our clients’ underlying e-discovery processes to ultimately give Fios an edge in this very competitive market.

3. Is Fios, like many e-discovery companies, looking to be purchased in the near future? Will investigating those options be a priority for you during your tenure?

No and no. We are with George Socha: acknowledge the reality vs the rumor. Stories have circulated that Fios is on the verge of acquisition/merger/demise since 1999, and yet, we are here and still going strong. Note that we carry no debt and maintain a strong cash position. While I do think there will be consolidation in the e-discovery space, I believe market share will be won by the companies with innovative solutions and innovative pricing, packaging and partners — these are my priorities. We intend to be one of the winning companies.

4. What are Fios’ key goals for 2011 — and beyond?

Our goal is to gain market share through continued focus on client satisfaction, execution of our plan, leveraging our brand and technology innovation. This of course means we are measuring and expecting improved revenues, profits and products, as well as industry-leading customer satisfaction. This should enable us to be an e-discovery leader for years to come.